ASTM E833-01

NOTICE: This standard has either been superseded and replaced by a new version or discontinued.
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Designation: E 833 – 01 An American National Standard
Standard Terminology of
1
Building Economics
This standard is issued under the fixed designation E 833; the number immediately following the designation indicates the year of
original adoption or, in the case of revision, the year of last revision. A number in parentheses indicates the year of last reapproval. A
superscript epsilon (e) indicates an editorial change since the last revision or reapproval.
1. Scope building decision—a decision regarding the design, financing,
engineering, construction, management, or operation of a
1.1 This terminology relates to the economic evaluation of
building.
building construction as used in other standards under the
building economics—the application of economic analysis to
jurisdiction of ASTM Committee E06 on Performance of
the design, financing, engineering, construction, manage-
Building Constructions, and does not necessarily correspond to
ment, operation, ownership, or disposition of buildings.
the terminology used in other areas of accounting and econom-
building system—an aggregation or assemblage of items
ics.
joined in regular interaction or interdependence in buildings
DEFINITIONS
or building construction.
capital cost—the costs of acquiring, substantially improving,
adjusted internal rate-of-return (AIRR)—the compound
expanding, changing the functional use of, or replacing a
rate of interest that, when used to discount the terminal
building or building system.
values of costs and benefits of a project over a given study
cash flow—the stream of monetary (dollar) values—costs and
period, will make the costs equal the benefits when cash
benefits—resulting from a project investment.
flows are reinvested at a specified rate. (Syn. financial
certainty equivalent technique—a technique used to adjust
management rate of return (FMRR))
economic measures of project worth to reflect risk exposure
annual value—a uniform annual amount equivalent to the
and risk attitude.
project costs or benefits taking into account the time value of
money throughout the study period (Syn. annual worth, DISCUSSION—Estimated project returns are multiplied by a certainty
equivalent factor (CEF) to determine the certainty equivalent amount a
equivalent uniform annual value).
decision maker finds equally acceptable to the estimated project
annual worth—See annual value.
returns.
annually recurring costs—those costs that are incurred in a
regular pattern each year throughout the study period.
code of accounts—a hierarchical, company-specific system
base date—See base time. for cost accounting, control, and management.
base time—the date to which all future and past benefits and
Comprehensive Environmental Response, Compensation,
costs are converted when a present value method is used and Liability Act (CERCLA)—also known as “Super-
(usually the beginning of the study period) (Syn. base date).
fund,” CERCLA prescribes actions and regulatory require-
baseline plan—an established scope, cost, schedule, and ments for reducing risks to human health and the environ-
technical performance plan against which the status of
ment resulting from releases or threatened releases of
resources and the effort of the overall program or project
hazardous substances into the environment.
activities are measured, assessed, and controlled. constant dollars—dollars of uniform purchasing power exclu-
benefit-cost analysis—a method of evaluating projects or
sive of general inflation or deflation.
investments by comparing the present value or annual value
DISCUSSION—Constant dollars are tied to a reference year.
of expected benefits to the present value or annual value of
construction contingency—the funds added to estimated and
expected costs.
benefit-to-cost ratio (BCR)—benefits divided by costs, where known costs in case of cost overruns during construction.
construction documents—materials that convey the physical,
both are discounted to a present value or equivalent uniform
annual value (Syn. benefit-cost ratio). aesthetic, technical, performance, and administrative re-
quirements necessary to initiate a contract for construction of
breakeven analysis—a technique for determining that value of
a variable which results in benefits (savings) just equal to the proposed project.
cost analysis—subdividing the project estimate into compo-
costs.
nent parts to find and compare their relationship to previ-
ously established historical costs.
1
This terminology is under the jurisdiction of ASTM Committee E06 on
cost effective—the condition whereby the present value ben-
Performance of Buildings and is the direct responsibility of Subcommittee E06.81
on Building Economics.
efits (savings) of an investment exceeds its present value
Current edition approved May 10, 2001. Published July 2001. Originally
costs.
published as E 833 – 81.
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